After El Salvador and the Central African Republic approved Bitcoin as legal tender, other countries, such as Paraguay, are rushing to catch up and implement regulations for this unique asset class.
Countries in Latin America are taking cryptocurrencies more seriously and are currently striving to ratify legal and other related frameworks.
Due to its inexpensive electricity and a “crypto-friendly” environment, Paraguay has historically been seen as a mining haven for cryptocurrency miners.
Despite resistance from the country’s central bank, Paraguay’s House of Representatives adopted a plan to regulate cryptocurrency on Thursday.
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Paraguay introduces cryptocurrency bill in majority vote
In a special session, the deputies voted by 40 to 12 to approve the amended bill.
Despite the law’s initial approval by the Senate in December last year, recent House reviews will need to reconsider the bill before it can be submitted for presidential approval.
The law, which was initially submitted to Paraguay’s Senate in July last year, aims to regulate commercial activity involving digital assets. This includes licensing and supervising cryptocurrency mining companies operating within the country. The proposed legislation does not make any cryptocurrency legal tender.
Bill seeks to make Paraguay a hub for cryptocurrency mining
Moreover, the purpose of this measure is to make Paraguay an international center for miners due to the country’s low electricity rates, which are about five cents per kilowatt-hour, the lowest in Latin America.
The new legislation requires bitcoin exchanges to register their businesses as virtual asset service providers with Paraguay’s Anti-Money Laundering Agency.
The bill states that “the objective of this law is to control the production and marketing activities of virtual or crypto assets in order to provide legal, financial and financial security for companies that benefit from their production and marketing.”
Crypto total market cap at $1.18 trillion on the weekend chart | Source: TradingView.com
Industrial Energy Use License
Individual and corporate miners will be required to apply for a license to consume industrial electricity and then apply for a license if the procedure becomes law.
The proposed legislation also creates a registry for any individual or legal business that intends to provide cryptocurrency trading or custody services to third parties, but the idea of an exchange is not included.
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Nearly half of Paraguay’s FinTech companies made digital payments and innovative financial services available to businesses and consumers in 2020.
In addition, 30% have provided crowdfunding services and technologies to financial institutions. Statista data shows that only 8% of new businesses are using cryptocurrency.
Featured image from VOI, chart from TradingView.com
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